Multiple RMDs

Dear Trust Officer: 

I turn 73 this year, so I have to begin my Required Minimum Distributions (RMDs) this year.  I have a large balance in my 401(k) account, and a smaller but substantial IRA rollover account. Neither account has enough cash for my RMD, so I will have to sell some investments. I’d like to take this year’s RMD just from the 401(k), so as to leave my IRA investments intact.  Is it OK to take the entire RMD from just one account?—Fortunate Retiree

Dear Fortunate:

Sorry, no, that won’t work. It is true that, if you have multiple IRAs, you can choose just one of them for a distribution to meet the RMD mandate for all of them, but this rule does not extend to accounts in employer retirement plans, such as your 401(k) account.  You will need to arrange for two RMDs, one from each of those two accounts.

After you have taken both RMDs, you might consider rolling over your 401(k) balance into an IRA for next year, which could simplify next year’s analysis.  However, if your plan does not provide for an in-kind distribution of securities to an IRA rollover, I can understand your reluctance to take so major a step.

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